Saturday, March 17, 2012

The mystery of the Argentine Big Mac…

I lived in Argentina almost my entire life, and while not a fan of fast food I’ve gone to McDonalds and Burger King on many occasions.
While I like Burger King better, McDonalds has nicer (and better advertised) toys, and being the father of two that basically seals my destiny in terms of burger choice.
When eating at the spooky clown’s store I’ve always ordered a quarter pounder with cheese. A couple burger menus and Happy meals would usually land a hefty bill to pay. Going to McDonalds is more expensive in Argentina than in USA, I knew that much, but seems that the evil looking clown has no problem in playing along the local corrupt government.
You see, there’s this thing called the Big Mac Index, an informal index created by The Economist in 1986 to measure purchasing power parity, or in other words how expensive stuff is compared from one country to another. To do that you need a product that is similar in each country, and the BigMac does just that. As informal as the Big Mac Index is, its been around long enough to be taken very seriously.

Surprised was I when I read that Argentina does quite well in the BigMac Index… but why is it then that I’ve always found it to be MORE expensive than other countries where Ive been to McDonalds?… wait.. why is it that I’ve always ordered Quarter Pounders with cheese instead of BigMacs?… oh! That’s right! There’s NO BIGMAC in Argentina! Its not advertised, its not displayed in any of their menu options, at least not openly in those big banners with pictures and menus. If you don’t see it offered, you don’t order it, and that’s the idea. McDonalds doesn’t want you to order the BigMac in  Argentina.

But why would they do this? Simple. To LIE about the BigMac Index, and make Argentina sound 50% cheaper than it actually is. If you compare the unusually low official price of the BigMac to the rest of the menus you see how its surprisingly low. The Argentine government came to some sort of arrangement with McDonalds: Keep the BigMac at X price, and we’ll make it up to you. That’s why the price is kept so low, and that’s why they don’t tell anyone the BigMac is listed.
But can you actually get the BIgMac in Argentina, even if it’s a best kept secret? I do remember this one time when my father visited us in Argentina and ordered a BigMac and they told him they didn’t have it, but other sources assure that they are obligated to sell it to you, so give it a try!
That’s how it works in Argentina. In any other sane country a company would openly advertise a product that they have at a very low price. In Argentina, its kept secret so as to not lose money, yet officially have it listed.
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Mark Voelker said...

This one takes the prize. I am truly flabbergasted.

We really, really have to quit lying, especially to ourselves. Pretending the sky is green doesn't make it so.

Thanks for your great book, by the way. It's a touchstone.

Anonymous said...

Strangely, I've noticed the cheap Argentine Big Macs on that index for years, like maybe twenty years as I think I discovered this when I was in an economics class in college in the early 1990s. Thanks for bringing this to light. I'm late to the party here, but I wish you and your family love, luck, joy, prosperity, and liberty in Northern Ireland.


Anonymous said...

En realidad, no lo promocionan porque no les conviene, pero esta. Cristina el año pasado establecio que al menos un combo debia estar a un precio accesible a todos y esta $20. Pero no lo promocionan porque les conviene que compres una de $40. Muy bueno tu blog, saludos